Google Stock Will Trend Higher via Diverse Opportunities

Alphabet’s healthcare and cloud segments are especially enticing

Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) shares have been in an uptrend in the last one year. During this period, Google stock has trended higher by 35%. It currently has a market capitalization of $1.04 trillion.

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Like any other equity, Google stock is likely to see periods of correction and consolidation. However, I believe that it will remain in an uptrend.

In addition, Alphabet has diversified growth opportunities with financial muscles to pursue organic and inorganic growth. As of December 2019, the company reported cash and equivalents of $119.7 billion. Further, Alphabet reported free cash flow of $31 billion for the same period. There will be further clarity on financial flexibility when I discuss the company’s growth strategy.

Ample Growth Scope for Google Health

Alphabet is a big entity and it’s not possible to discuss every aspect of a business in a single column. I therefore wanted to stress emerging growth opportunities than talk about established business segments.

Sundar Pichai, CEO of Alphabet, recently commented that “health care offers the biggest potential over the next five to 10 years for using artificial intelligence to improve outcomes.” The CEO also “vowed” that Alphabet will keep privacy issues as a top priority.

It is worth noting that even Nvidia (NASDAQ:NVDA) is using AI to provide imaging and genomics services to the healthcare industry. So, there will be increasing competition, but Alphabet is among the early movers.

The big data analytics firm’s acquisition should help Google, which has already been buoyed by the success of success of Google Cloud’s BigQuery.

Google cloud for healthcare and life sciences is also likely to accelerate growth. The cloud segment already has customers, which include McKesson (NYSE:MCK), National Institutes of Health and Athena Breast Health Network, among others.

It is worth noting here that Google Cloud reported revenue of $4 billion in 2017, $5.8 billion in 2018 and $8.9 billion in 2019. Clearly, the growth rate has witnessed acceleration. Organic and inorganic growth will continue to deliver strong results for the segment.

My Concluding Thoughts on Google Stock

Google stock has been in an uptrend and there are fundamental reasons backing the rally. The stock is certainly not overvalued, and any correction is an opportunity for fresh exposure.

Besides a healthy core business, Alphabet is likely to register sustained growth with a focus on healthcare and cloud services. An aggressive inorganic growth approach is also likely to help in acquiring innovators and staying ahead of the curve.

Overall, I remain positive on Google stock with a medium- to long-term time horizon.

As of this writing, Faisal Humayun did not hold a position in any of the aforementioned securities.